Nominees have first right over life insurance claims, not legal heirs
As you deal with the trauma of losing a loved one, making a life insurance claim may become daunting if you don’t know how to go about it. One of the most important aspects to consider is the difference between the nominee and heir when it comes to insurance claims.
Insurance policy is treated as an estate of the deceased policyholder. Legal heirs have a right over the policy as long as the assets of the deceased policyholder devolve upon her.
However, in life insurance, there is a concept known as beneficial nominee. This provision was introduced in the Insurance Laws (Amendment) Act, 2015. If an immediate family member (parents, or spouse, or children) is made the nominee, then the proceeds will go to the intended person. Legal heirs will not have any claim on the money. “If the nominee is not survived by the insured, the proceeds will go to the legal heirs," said Mukesh Jain, corporate lawyer and founder of Mukesh Jain and Associates, a Mumbai-based law firm.
In the absence of a nominee, the legal heir can claim the insurance proceeds. “Apart from the claim intimation letter and other requisite documentation like death certificate, ID proof of the beneficiary, policy papers, discharge form (if any), post mortem report and hospital records (in case of unnatural death), the legal heir needs to submit the succession certificate issued by a competent court which establishes the right of the legal heir over the assets of the deceased policyholder, including the insurance proceeds," said Vatsala Sameer, company secretary, Canara HSBC Oriental Bank of Commerce Life Insurance.
If there are multiple legal heirs and only one is claiming the proceeds, then all other legal heirs need to agree and express their consent to the insurer for that. “The affidavit-cum-indemnity signed by all the legal heirs protects the insurer from similar and separate claims under the policy," said a spokesperson from PNB Metlife Insurance Co. Ltd.
The legal heir can make a claim when there is no nomination any time before the maturity of the policy, or if the insured has not requested a fresh nomination in case of the death of the nominee or in case of death of the nominee after the claim is filed but before its settlement.
In case the deceased has more than one child and has not nominated all of them, a claim can be lodged only by the nominated child and the insurer shall pay the proceeds to the nominee only. Other children can stake claim to their shares by moving a competent court of law, said the PNB Metlife spokesperson. So get clarity on your situation and act accordingly.